Accounting. Prof: Jim Wallace TA: Charles Yeh. Overview of Week 1. Administrative stuff What is financial accounting? Financial statements GAAP What number do you want?. Administrative Stuff. Who am I Who is your T.A. Teaching philosophy Syllabus Homework Calculator.
Prof: Jim Wallace
TA: Charles Yeh
Assets = Liabilities + Equity
Uses of funds = Sources of funds
To be reported on a balance sheet, an asset must:
Equity consists of:
Stockholders’ equity = Company book value
Revenue Recognition Principle – record revenue when
Realized or Realizable
Matching Principle – record expenses when
Neither the recognition of revenue nor the recording of expense necessarily involves the receipt or payment of cashAccrual Accounting
Financial statements must contain objective and verifiable numbers if they are to be useful. Yet, many estimates and subjective assumptions are required for the preparation of these reports. Please reconcile these apparently inconsistent statements.
The SEC requires all publicly traded companies to have their financial statements audited. Prior to this requirement many companies voluntarily had their statements audited. Given the cost and inconvenience, why would they do this?